CBS Gives Krugman Platform to Bash Austerity, Call for More Spending

On Monday, CBS This Morning gave leftist New York Times columnist Paul
Krugman a platform to promote his new book and to spout his usual
prescription of massive government spending. Krugman also bashed Mitt
Romney: "He's going to make Herbert Hoover look good by comparison." Anchor Gayle King boosted her guest by twice citing President Obama's praise for the author as "one of the smartest economic reporters."

Krugman briefly acknowledged the "long-term budget problem," but quickly added that "now is not the time to be slashing....Now is the time to be doing public works, to be rehiring those school teachers, to get this economy moving again."
He also ripped the austerity measures taken by several European
countries: "You look at what's happening in Europe and...we just learned
that austerity is not the answer...the big problem now is not to have a
new stimulus, but simply to reverse those cuts at the state level."

King teased the segment with the columnist by gushing at his side, "I
would like to introduce you to the man that President Barack Obama says
is one of the smartest economic reporters in the country. That
would be you, Paul Krugman." Co-anchor Charlie Rose continued in this
vein at the beginning of the segment as he referenced the dedication in
his guest's book: "He [Krugman] is holding nothing back in his latest book.
The title of the book is called, 'End This Depression Now!' The
dedication reads, 'To the unemployed who deserve better.'...First of
all, speak to the dedication. I mean, you think that American
policymakers have failed the unemployed and have failed the economy."

Krugman almost immediately launched into his call for spending in his reply:

KRUGMAN:
We have. This is- there's enormous human damage being done to this
economy and it's all unnecessary. We have the knowledge. We have the
tools. If we could get our politicians to move and do the right thing, we could be out of this very fast.

ROSE: Okay. The right thing is?

KRUGMAN: The right thing is, actually, to spend more.
Right now, you know, we have a long-term budget problem, but now is not
the time to be slashing. Now is not the time to be laying off school
teachers. Now is the time to be doing public works, to be rehiring those
school teachers, to get this economy moving again.

ROSE: And the alternative is austerity- is saying we have to attack the debt first- the debt and deficit- and you are now arguing that if you look at what's happened in Europe, they have tried that and it has failed and made things worse.

KRUGMAN: Yes. You look at European countries that have done the
austerity; they have mass unemployment- you know, 25 percent now in
Spain- and they're not even making much progress on the deficit because
the economy shrinks, revenues shrink, the long-term growth prospects
fall off. So, no- austerity later; austerity when the economy has
recovered....

The morning show did put up graphics showing the massive rise in the
debt, as well as the 8.2 percent unemployment rate, but the anchor
didn't bring up these details during the segment.

Later in the interview, the writer called for even more "quantitative
easing" from the Federal Reserve. King soon followed with her second
reference to Obama's label from "Rolling Stone":

ROSE: What would you want the Fed to do now?

KRUGMAN: First of all, more of the stuff that it's done some
of, but not enough of- of the quantitative easing. But it also needs to
say, look, we're not that concerned about inflation. If- tell
us, you know, five percent, six percent is a problem; but three percent,
four percent is not, and we're willing- in fact, would like to see a
little bit of inflation to get this economy moving- change the
expectations, help us along in getting out of this slump.

KING: But you say that it could take seven years if we keep going the
way we're going....And if we follow your advice, it would take-

KRUGMAN: Eighteen months, two years.

KING: So why aren't people listening to you, Paul Krugman? I
love that President Obama, in 'Rolling Stone'- did you see that he
called you one of the smartest economic reporters? Did you see that?

KRUGMAN: Yeah- I'm sorry to say, one of? (King laughs) No, but look, there's a lot of practices to overcome-

ROSE: Very good line, Paul.

KRUGMAN: And- no, Obama is a smart guy, and I think- I actually know
that a lot of people around him actually share my views- not perhaps 100
percent- but they face political opposition. But also, they face a lack of boldness- a lack of audacity, you might say....And what really we need here is audacity.

Rose followed up by asking about the economic proposals of Obama's
presumptive rival, Mitt Romney. The New York Times columnist answered
with his Hoover citation:

ROSE: Do you believe Romney has a better idea?

KRUGMAN: No. I mean, what Romney is saying- let's do exactly
what we did under the Bush administration, and this time, hope for
different results. He's saying, let's do exactly what they're doing in
Ireland, which has led to 15 percent unemployment and 30 percent youth
unemployment, and that will lead to great results here. Now, Romney is- I mean, he's going to make Herbert Hoover look good by comparison.

Earlier in the interview, Krugman dropped a cultural reference, which sailed right over Charlie Rose's head:

ROSE: But here's the other point you make: Ben Bernanke is the man who
understood the Depression; understood what happened to Japan; and he's
now in charge of the Fed and he's a fellow former professor at
Princeton. And you're now saying what? That he's wrong, wrong, wrong?

KRUGMAN: Well, funny thing is, I can quote Ben Bernanke as a professor
about what the Japanese should have been doing when they did a dress
rehearsal for our crisis and it applies perfectly to Ben Bernanke right
now. Now, I think there's mixture. He's under political pressure from
the right; he's probably been somewhat taken over-

ROSE: I thought the Fed was immune from political pressure.

KRUGMAN: Yeah, right, sure. (King laughs) But I'll say a little bit: he's been assimilated by the Borg; that is, you know, the Fed has an institute-

ROSE: The blog?

KRUGMAN: The Borg; the Borg, as on Star Trek. The Fed has an institutional culture that makes it reluctant to be adventurous....

The full transcript of Charlie Rose and Gayle King's interview of Paul
Krugman, which aired at the bottom of the 8 am Eastern hour of Monday's
CBS This Morning:

CHARLIE ROSE: And there is New York Times columnist Paul Krugman. He is
holding nothing back in his latest book. The title of the book is
called, 'End This Depression Now!' The dedication reads, 'To the
unemployed who deserve better.'

Paul Krugman, winner of the 2008 Nobel Prize for economics, is with us. Welcome.

PAUL KRUGMAN, AUTHOR, END THIS DEPRESSION NOW!: Hi there.

[CBS News Graphic: "It's The Economy: Nobel Prize Winner On What Needs To Be Done"]

ROSE: You- there's lots to talk about here. First of all, speak to the
dedication. I mean, you think that American policymakers have failed the
unemployed and have failed the economy.

KRUGMAN: We have. This is- there's enormous human damage being done to
this economy and it's all unnecessary. We have the knowledge. We have
the tools. If we could get our politicians to move and do the right
thing, we could be out of this very fast.

ROSE: Okay. The right thing is?

KRUGMAN: The right thing is, actually, to spend more. Right now, you
know, we have a long-term budget problem, but now is not the time to be
slashing. Now is not the time to be laying off school teachers. Now is
the time to be doing public works, to be rehiring those school teachers,
to get this economy moving again.

ROSE: And the alternative is austerity- is saying we have to attack the
debt first- the debt and deficit- and you are now arguing that if you
look at what's happened in Europe, they have tried that and it has
failed and made things worse.

KRUGMAN: Yes. You look at European countries that have done the
austerity; they have mass unemployment- you know, 25 percent now in
Spain- and they're not even making much progress on the deficit because
the economy shrinks, revenues shrink, the long-term growth prospects
fall off. So, no- austerity later; austerity when the economy has
recovered, but not now-

ROSE: As you know-

GAYLE KING: But you also-

ROSE: Go ahead.

KING: But you also say, Paul, that we've been here before. In your
book, you talk about what happened back in the 1930s. We've been here
before, and why aren't we taking the lessons from that?

KRUGMAN: There's a lot of things going on here. There's ideology;
there's interest groups; there's people who are afraid that if you say
the government could do anything good ever, then it will, you know, take
over the world. But that's the point. I think we need to say, look,
this- if all the arguments people make about why we can't have a
recovery now are the same arguments people were making in the '30s. And
then, we started spending to get ready for World War II and, all of
sudden, the Depression was over, and we could do that again. We could do
it on a moment's notice.

ROSE: But here's the other point you make: Ben Bernanke is the man who
understood the Depression; understood what happened to Japan; and he's
now in charge of the Fed and he's a fellow former professor at
Princeton. And you're now saying what? That he's wrong, wrong, wrong?

KRUGMAN: Well, funny thing is, I can quote Ben Bernanke as a professor
about what the Japanese should have been doing when they did a dress
rehearsal for our crisis and it applies perfectly to Ben Bernanke right
now. Now, I think there's mixture. He's under political pressure from
the right; he's probably been somewhat taken over-

ROSE: I thought the Fed was immune from political pressure.

KRUGMAN: Yeah, right, sure. (King laughs) But I'll say a little bit:
he's been assimilated by the Borg; that is, you know, the Fed has an
institute-

ROSE: The blog?

KRUGMAN: The Borg; the Borg, as on Star Trek. The Fed has an
institutional culture that makes it reluctant to be adventurous, but he
needs to remember this-

ROSE: What would you want the Fed to do now?

KRUGMAN: First of all, more of the stuff that it's done some of, but
not enough of- of the quantitative easing. But it also needs to say,
look, we're not that concerned about inflation. If- tell us, you know,
five percent, six percent is a problem; but three percent, four percent
is not, and we're willing- in fact, would like to see a little bit of
inflation to get this economy moving- change the expectations, help us
along in getting out of this slump.

KING: But you say that it could take seven years if we keep going the way we're going-

KRUGMAN: That's right. We're-

KING: And if we follow your advice, it would take-

KRUGMAN: Eighteen months, two years.

KING: So why aren't people listening to you, Paul Krugman? I love that
President Obama, in 'Rolling Stone'- did you see that he called you one
of the smartest economic reporters? Did you see that?

KRUGMAN: Yeah- I'm sorry to say, one of? (King laughs) No, but look, there's a lot of practices to overcome-

ROSE: Very good line, Paul.

KRUGMAN: And- no, Obama is a smart guy, and I think- I actually know
that a lot of people around him actually share my views- not perhaps 100
percent- but they face political opposition. But also, they face a lack
of boldness- a lack of audacity, you might say-

KING: Yeah, yeah. That's what you say-

KRUGMAN: And what really we need here is audacity.

ROSE: But then, who's failing there? If a lot of people around the
President share your views, then who doesn't share your views around the
President who has more influence than you or the people around him who
agree with you?

KRUGMAN: Well, I think his political team actually let him down. They kept on talking about what-

ROSE: You think the political team is deciding economic policy for the President?

KRUGMAN: Of course- they're certainly putting limits on what can be
done. Look, last fall, the political team apparently was very dubious.
He announced a policy that wasn't as bold as what I want, but bolder
than people expected. The political team is very dubious. They say,
people get nervous because it will [cost] too much money, and it turned
out it was a political winner. So I think the political team has been
wrong on this.

ROSE: Do you believe Romney has a better idea?

KRUGMAN: No. I mean, what Romney is saying- let's do exactly what we
did under the Bush administration, and this time, hope for different
results. He's saying, let's do exactly what they're doing in Ireland,
which has led to 15 percent unemployment and 30 percent youth
unemployment, and that will lead to great results here. Now, Romney is- I
mean, he's going to make Herbert Hoover look good by comparison.

KING: So are you optimistic? You- I'm curious- first, Paul, if you're
optimistic; and number two, in your book he says, Charlie, that if you
have a choice between despair and hope, you always choose hope because
nothing lasts forever except for red wine-

KRUGMAN: Red wine on a white couch-

KING: I'm curious about how you know that, number one. I'm curious, how do you know that, Paul?

KRUGMAN: There have been incidents. (Rose laughs)

KING: Okay, there have been incidents. So are you optimistic as we sit here today?

KRUGMAN: I think I'm- lets put it this way. There- things are never over. We fumbled this, but-

KING: It's not too late?

KRUGMAN: It's never too late. I've learned a lot, and I've been a
columnist now for a long time, and no story is ever over. And the things
you think are politically impossible right now can suddenly turn into
being politically inevitable a year from now. So, the thing is to keep
on hammering on this-

ROSE: What might be politically inevitable a year from now?

KRUGMAN: That we actually do something about unemployment; that we
actually take a look and say, hey, you know, this is not tolerable-

ROSE: But do you think that anything is going to change in terms of stimulating the economy in the next two years?

KRUGMAN: It's a lot- the- right now, with the actual-

ROSE: They couldn't even do that, Paul, when the President came in, in
terms of stimulating to the level that you wanted to, and- when the
President had a majority in both houses.

KRUGMAN: Well, but the thing is, a lot of water's under the bridge, and
we have a lot of lessons out there. You look at what's happening in
Europe and you say, we just learned that austerity is not the answer.
And, in a lot of ways technically, it's also easier, because the big
problem now is not to have a new stimulus, but simply to reverse those
cuts at the state level.

ROSE: Quickly, does what happens in Europe-and is continuing to happen,
especially looking at Spain- threaten the United States economy?

KRUGMAN: Some; not as much as people think, because we mostly sell to
ourselves. Even now, we don't sell that much to Europe. But it's
certainly not good. I would like to see prosperity in Europe for a lot
of reasons, including the benefits to us.

KING: I have a feeling, Paul Krugman, they might take your call if you
called up the White House and said, hey, guys, I've got an idea.

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